The achievements I am proudest of and which have involved me most directly are in the area of superannuation.
We promised to reverse the 1999 cuts to New Zealand super and we have done that. We have restored the floor for the married rate to 65 percent of the average wage. We have also undertaken to deal with another source of anxiety for older New Zealanders by introducing legislation to remove asset testing from long-stay elderly care. We will not however pass the measure into law until our second term as we do not have room to finance it in this year’s budget.
The other promise we made on super was to guarantee superannuation into the future by putting aside contributions now to smooth the costs of an ageing population. The New Zealand Superannuation Act was passed last year and the government has been making payments of $23 million a fortnight into the scheme.
The money is now sitting in a special account in the Debt Management Office of the Treasury until the governance and administrative arrangements for the fund are established.
This will be done by the board of guardians. The Act provides for a board of five to seven members, and gives the board responsibility for setting the investment policies of the fund and for appointing the funds managers.
It requires the board to follow best practice portfolio management, maximise returns without undue risk to the fund as a whole, and avoid prejudice to New Zealand’s reputation as a responsible member of the world community.
One of the criticisms of the Fund is that it presents a very tempting pot of money for politicians of the future to dip into for their plans. So to protect the board – and the fund – from political meddling, the legislation stipulates that the government must make the appointments from a short list prepared by a special nominating committee.
The committee advertised for nominations last year and received over a hundred expressions of interest. It is now sorting through the candidates and hopes to be able to present the list to the government this month.
I would expect to be able to make the appointments before the end of the month, and would hope that the fund was up and operational by around mid year.
The New Zealand Superannuation Fund represents one of the most significant political initiatives in decades. It is often mistakenly presented as a policy of special interest to the currently retired, but the real beneficiaries are not today’s superannuitants but the superannuitants of the future - the people who are in their mid fifties now, and younger.
Although the previous government cut super in the late 1990s in response to the Asian crisis, almost all commentators, including National, accept that it will not come under serious cost pressure until the baby boomers – those born between 1946 and 1965 - begin to retire.
That is why National is prepared to guarantee superannuation at current entitlements to people who are now in or near retirement. They cannot with any degree of good faith or credibility extend the guarantee beyond that because they are not prepared to support the government’s partial prefunding scheme and therefore have no funding mechanism.
However – at least at this stage – they are refusing to state where their cut off point would be and what people would miss out. What will they define as "near" retirement – 55 perhaps, or 50? And remember for the purposes of this discussion that a National government would probably comprise the ACT Party who are on record as supporting a raise in the qualifying age for super from 65 to 68.
Until National is prepared to come clean on this issue, we cannot have a meaningful or honest debate on super in this country.
This is an extract from a speech Finance Minister Michael Cullen made to Age Concern in Dunedin on April 2.
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